MCLEAN, Va.--(BUSINESS WIRE)--March 2, 2012--ITT Exelis (NYSE: XLS)
today reported results for the full year and fourth quarter of 2011. For
2011, the company reported full-year sales of $5.84 billion and adjusted
operating income of $583 million, compared to full-year sales of $5.89
billion and operating income of $689 million in 2010.3
Adjusted earnings per fully diluted share for 2011 were $1.99, compared
with earnings from continuing operations per fully diluted share of
$2.39 in the prior-year period.

Exelis reported fourth-quarter sales of $1.48 billion and adjusted
operating income of $168 million, compared to fourth-quarter sales of
$1.64 billion and operating income of $219 million in 2010. Adjusted
earnings per fully diluted share for the fourth quarter of 2011 were
$0.50, compared to earnings from continuing operations per fully diluted
share of $0.75 in the fourth quarter of 2010.3

“During a year of significant transition for the company and a
challenging budget environment for our customers, the focused execution
of our business strategy and dedicated professionalism of our employees
helped enable Exelis to deliver its operating and financial performance
in 2011,” said Dave Melcher, Chief Executive Officer and President of
Exelis.

“We finished 2011 with stronger-than-anticipated top-line performance,
driven largely by a strong showing in our Information and Technical
Services segment. We believe our 2012 guidance appropriately reflects
our challenging global business environment. The diversified Exelis
portfolio is aligned with our customers’ mission-critical priorities in
enduring capabilities and emerging challenges. As we embark on our first
full year as an independent, publicly traded company, we are focused on
creating value for our shareholders and delivering the affordable,
innovative technologies and services to our customers for which Exelis
is known.”

Full-year funded orders increased 12 percent to $5.4 billion from the
prior year. Exelis ended the year with a solid total backlog of $11.7
billion, an increase of 2 percent over 2010. 4

Several billion-plus-dollar, multi-year new program starts in the
company’s Information and Technical Services segment - including Kuwait
Base Operations and Security Support Services (K-BOSSS), Army
Prepositioned Stocks-5 (APS-5) in Kuwait, Afghan National Security
Forces - North and South (ANSF-NS) and the Space Communication and
Network Services (SCNS) contract - offset decreased product sales in
2011. The significant shift in sales in favor of service contracts
resulted in lower adjusted operating margins of 10 percent, down from
11.7 percent in 2010. The company expects its products-to-services sales
mix to largely stabilize in 2012 and beyond.

Information and Technical Services fourth-quarter and 2011 sales
increased 34.6 percent and 31.7 percent, respectively, primarily due to
contract wins on the company’s Middle East programs, namely K-BOSSS and
surge-related efforts to support the U.S. armed services in Kuwait and
Afghanistan on the APS-5 Kuwait contract and the ANSF Facilities Support
programs. This segment also saw increased sales in non-DoD contracts
during the period, including the SCNS contract with the National
Aeronautics and Space Administration.

Information and Technical Services fourth-quarter adjusted operating
income increased 206.7 percent and, as a percent of sales, increased
from 2.6 percent to 6 percent. In the fourth quarter of 2010, this
segment recorded a loss on a Middle East program, which was primarily
the reason for the lower margin in the fourth quarter of 2010 as
compared to 2011. Information and Technical Services 2011 adjusted
operating income increased 33.3 percent and, as a percent of sales, from
5.5 percent to 5.6 percent. The higher adjusted operating margin was
primarily the result of sales mix and favorable contract adjustments.

2012 Guidance

Sales

$5.4 billion to $5.5 billion

Adj. Operating Margin5

10.6% to 10.8%

Diluted Adjusted Earnings per Share

$1.80 to $1.86

The company also announced guidance for full-year 2012. Full-year 2012
sales are expected to be $5.4 billion to $5.5 billion, a decrease of 7
percent from 2011. Full-year adjusted operating margin is expected to be
10.6 percent to 10.8 percent, an increase of 60 to 80 basis points
year-over-year. Adjusted fully diluted earnings per share are expected
in the range of $1.80 to $1.86 per share, down 8 percent from 2011.

Adjusted operating margin guidance for 2012 includes the impact of lower
pension expense, compared to 2011, resulting from a change in the
company’s salaried pension plan. The company adopted certain changes to
its defined benefit pension plan, which gave existing employees a choice
between the existing plan and an enhanced defined contribution plan. The
existing defined benefit plan is no longer available to new employees.
The resulting participant population demographics enabled the use of an
extension of the amortization period for prior gains and losses and a
net decrease in FAS pension expense of approximately $70 million to $80
million, compared to the prior period. In 2012, the company expects to
make pre-tax cash pension contributions in the range of $320 million to
$370 million.

The company notes that forward-looking statements of future performance
made in this release are based upon current expectations and are subject
to factors that could cause actual results to differ materially from
those suggested here, including those factors set forth in the Safe
Harbor Statement below.

Investor Call Today

ITT Exelis senior management will host a conference call for investors
today at 10 a.m. Eastern Standard Time to review fourth-quarter and
full-year 2011 results, discuss 2012 expectations and answer questions.
The briefing can be monitored live via webcast at the following address
on the company's website: www.exelisinc.com/investors/.

About ITT Exelis

ITT Exelis is a diversified, top-tier global aerospace, defense and
information solutions company with strong positions in enduring and
emerging global markets. Exelis is a leader in networked communications,
sensing and surveillance, electronic warfare, navigation, air traffic
solutions and information systems with growing positions in cyber
security, composite aerostructures, logistics and technical services.
The company has a 50-year legacy of innovation and technology expertise,
partnering with customers worldwide to deliver affordable,
mission-critical products and services for managing global threats,
conflicts and complexities. Headquartered in McLean, Va., the company
employs about 20,500 people and generated 2011 sales of $5.8 billion. www.exelisinc.com

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995 (the “Act”): Certain material presented herein includes
forward-looking statements intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform Act of
1995. These forward-looking statements include, but are not limited to,
statements about the separation of the Company from ITT Corporation, the
terms and the effect of the separation, the nature and impact of such a
separation, capitalization of the Company, future strategic plans and
other statements that describe the Company’s business strategy, outlook,
objectives, plans, intentions or goals, and any discussion of future
operating or financial performance. Whenever used, words such as
“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe,” “target” and other terms of similar meaning are intended to
identify such forward-looking statements. Forward-looking statements are
uncertain and to some extent unpredictable, and involve known and
unknown risks, uncertainties and other important factors that could
cause actual results to differ materially from those expressed or
implied in, or reasonably inferred from, such forward-looking
statements. Factors that could cause results to differ materially from
those anticipated include, but are not limited to:

Our dependence on the defense industry and the business risks peculiar
to that industry, including changing priorities or reductions in the
U.S. Government or international defense budgets;

Government regulations and compliance therewith, including changes to
the Department of Defense procurement process;

Our international operations, including sales to foreign customers;

Competition, industry capacity and production rates;

Misconduct of our employees, subcontractors, agents and business
partners;

The level of returns on postretirement benefit plan assets and
potential employee benefit plan contributions and other employment and
pension matters;

Changes in interest rates and other factors that affect earnings and
cash flows;

The mix of our contracts and programs, our performance, and our
ability to control costs;

Governmental investigations;

Our level of indebtedness and our ability to make payments on or
service our indebtedness;

Security breaches and other disruptions to our information technology
and operations; and

Unanticipated changes in our tax provisions or exposure to additional
income tax liabilities.

In addition, there are risks and uncertainties relating to the
separation including whether those transactions will result in any tax
liability, the operational and financial profile of the Company or any
of its businesses after giving effect to the separation, and the ability
of the Company to operate as an independent entity.

The Company undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. In addition, forward-looking
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from the Company’s historical
experience and our present expectations or projections. These risks and
uncertainties include, but are not limited to, those described in Exelis
Inc.’s Registration Statement on Form 10, and those described from time
to time in our future reports filed with the Securities and Exchange
Commission.

2 2012 adjusted earnings per share guidance includes an
approximate $0.25 benefit, as compared to 2011, primarily resulting from
an extension of the amortization period for unrealized gains and losses
as a result of a defined benefit plan change effective as of 1/1/2012
for the Company’s largest plan.

3 See Non-GAAP disclosures.

4 Total backlog includes both funded backlog (firm orders for
which funding is contractually obligated by the customer) and unfunded
backlog (firm orders for which funding is not currently contractually
obligated by the customer) and represents firm orders and potential
options on multi-year contracts, excluding potential orders under
indefinite delivery / indefinite quantity (IDIQ) contracts.

Management reviews key performance indicators including revenue,
segment operating income and margins, orders growth, and backlog,
among other metrics on a regular basis. In addition, we consider
certain additional measures to be useful to management and investors
evaluating our operating performance for the periods presented, and
provide a tool for evaluating our ongoing operations, liquidity and
management of assets. This information can assist investors in
assessing our financial performance and measures our ability to
generate capital for deployment among competing strategic
alternatives and initiatives, including, but not limited to,
acquisitions, and debt repayment. These metrics, however, are not
measures of financial performance under accounting principles
generally accepted in the United States of America (GAAP) and should
not be considered a substitute for sales, operating income, income
from continuing operations, or net cash from continuing operations
as determined in accordance with GAAP. We consider the following
non-GAAP measures, which may not be comparable to similarly titled
measures reported by other companies, to be key performance
indicators:

Adjusted income from continuing operations defined as income
from continuing operations, adjusted to exclude items that include,
but are not limited to significant charges or credits that impact
current results, but are not related to our ongoing operations,
unusual and infrequent non-operating items and non-operating tax
settlements or adjustments.

Segment operating income defined as income from continuing
operations of our two segments, adjusted to exclude items that
include, but are not limited to significant charges or credits that
impact current results, but are not related to our ongoing
operations, unusual and infrequent non-operating items and
non-operating tax settlements or adjustments.